steveh72 wrote:Hi ent,
Without commenting on gunns for I do not know the circumstances,
As a bank mgr I do feel you are being a bit harsh,
The joy of borrowing money is that interest & repayments are met if so no problem if not as a secured lender the reason why security is taken is to get your money back (as the person giving the money you get to set the rules) and I am quite sure that all the term deposit investors are quite happy about this for it is their money that is being lent out
If the rules are not acceptable then don't borrow the money
Cheers
Steve
Yes the administrators do very well and we are all employed in the wrong job in regards to the valuation an asset is only worth what somebody is prepared to pay.
Hi Steve
I prepared a detailed response but site logged me off and IE then records a post failure and chucks everything away with no ability to get it back
Firefox is so much nicer as you can backtrack.Steve the simple issue is this. Plantations required long-term loans but the banks used short term funding sources and then after the GFC panicked and "forced" all the plantation companies into transitioning their loans from long term to short term under threat of immediate closing of accounts. Once the new loan conditions became legally enforceable they then one by one pulled the trigger and demanded monies back, thus companies could not meet the "going concern" requirement and failed. Put in simple speak, if the banks demanded that people repay your housing loan today most could not. The simple fact is all the major companies involved in plantations have been forced into receivership by the Commonwealth and ANZ bank. At the very least a complete failure in lending policy by these banks with a near 100% industry failure rate. Where are the loan officers responsible for this disaster now? It is not a case of knowing the conditions as the lending conditions suddenly changed and no doubt, once the dust settles, more will come out. Basically, the big four banks do not understand agriculture and any company involved in agriculture in my humble opinion should not use them for funding, only use banks for transactional banking.
The big issue is the land is held by security by the banks and they are trying like mad in the courts to get the value of investors' trees reduced as low as possible (often negative value in some cases). Here it is not the shareholders suffering but mum and dad investors being held to ransom as they were flogged the tax effective investments by financial advisers but now have enforceable loans against them but no asset, or a dubious one.
The underlying problem stemmed from Western Australia where a major player changed the model from the tree investors funding the plantation through to harvest costs to one where the plantation company funded this and did it through borrowings. Pre GFC the banks were delighted to lend the money (in fact actively encouraged this) so made the older model unsalable to financial advisers. You even had the ridiculous situation of the banks lending to the plantation company that then lent to investors so the investors could “gear” their tax deduction to be the whole value of the loan. As a banker you might imagine what a mess some made of this with low document loans and even tax fraud. Sadly, the industry followed like sheep despite many accountants saying no. but marketering trumps accountants any day in a boardroom battle. The new model relied on stable financial markets and interest rates for fifteen to twenty-five years along with bullet proof growth rates. Commonsense would tell any sensible investor that this was not going to happen. But we are talking pre GFC bank stupidity and a tribe of financial advisers profiting from sizable commissions.
The big losers are the employees and investors in trees. The amount of money lost by shareholders is rather small by comparison and banks are doing nicely from penalty interest rates and default fees. My hope is the financial advisers will be subject to scrutiny but there has been no sign of that. Australia does not have the chapter 11 bankruptcy protection so solid assets and businesses subjected to short-term crises are shredded in Australia by our Shylock administrators and receivers laws. I saw firsthand two teams, one from the receiver, and one from the administrator billing huge fees for doing exactly the same job. There is something terribly wrong with our laws on company failure where a bank can engineer a failure and then profit from it.
Cheers
OMG! So now we will be told to believe that those who will have the party and celebrate are of course in no way responsible for the outcome they are celebrating! I'll just turn down my BS filter a little bit before it is overloaded. 
The issue is the specialized banks such as agricultural banks and development banks (held by the states) were sold of to the big banks in a deal made back in the eighties. This means you have general banks involved in areas where there is limited to none in house understanding. We are starting to see the growth of specialized banks as well as so called community banks but it will be a long time before they can fill the gap and then there is the constant taking of them over by the big banks and dumbing them down.
The whole process is broken to begin with. It is not a planned approach so grower returns well be heavily influenced by what was planted twenty or so years ago.
